Since October 2015, Jesse Saglio, 46, has been a key behind-the-scenes player at R.I. Commerce Corp., most recently serving as managing director and head of the investments group.
It was work that immersed him in the attraction of new companies to the state and expansion of pre-existing firms – often with the use of incentives.
Last month he moved into a more prominent role at the top of the agency’s executive ladder, replacing Darin Early as president and chief operating officer.
For now, he seems content to continue Early’s priorities and rely on what he called a “deep and talented team” at Commerce focused on growing Rhode Island’s economy by leveraging everything from respected educational institutions to a diverse workforce and the Ocean State’s celebrated quality of life.
What are your priorities coming in as president and COO and how do these responsibilities differ from your role as managing director and head of the investment group?
As managing director and head of the investment group – which oversees all of the incentive programs – [I was working with] Infosys Ltd., or [construction on] a building going up that we’re involved with.
The emphasis going forward, the next 12 months [or so], is more of the same – we’re very happy with the results. … Organizationally, we’re in a great place – Darin Early has done a great job in his time here making this a fantastic, professional organization that operates and functions in a very private-sector kind of manner, and that’s very important.
In terms of what we [will] do beyond what we have done, you will see continued focus and emphasis on the state’s economy and specifically what we can do even more for local and small businesses. We’ve done a lot [for those types of firms], but I think you will see more of that going forward.
Will your priorities mirror those of Early – financial services, investment, business development, branding, and marketing and tourism?
That structure, the way you described it, accurately defines the way the organization is currently structured.
Going forward, we’ll never stop looking at trying to make the organization even more efficient. Maybe [there will be updates] … but I wouldn’t expect any major changes.
Commerce has had many successes in recent years in helping attract and grow business in Rhode Island. What have you learned from these successes? And what, if anything, was learned from unsuccessful ventures, such as financing for 38 Studios and the “Cooler & Warmer” tourism campaign?
What we’ve learned from the successes [is] persistence, and that comes from [Gov. Gina M. Raimondo] down. A dogged persistence to always do more, do better, take meetings, get out in the marketplace and talk about all the reasons why this is the best state in the country to live and do business.
Things [such as] 38 Studios [which went bankrupt], we’ll just address it head on. … Our incentive programs rely heavily on prospective revenue, pay for performance – you do something and then you receive an incentive. When you see announcements about Infosys and there’s a headline dollar attached to that, that’s all prospective … virtually none of what we do is upfront.
The concept of taxpayer protection is something that’s near and dear to me. I’ve spent more of my life now than I would have guessed thinking very heavily along those lines – you can spur economies or fix problems protecting the taxpayer. The taxpayer isn’t making layouts upfront and then hoping for the best – that’s not how our programs work.
Residents will be curious to see how the state is being portrayed nationally in the follow-up to the “Cooler & Warmer” tourism marketing campaign. In September, Chief Marketing Officer Lara Salamano told Providence Business News the organization expected to release the tourism marketing campaign in October. When do you expect to launch and publicize the campaign?
Beyond saying whatever [Lara Salamano] does is going to be phenomenal, because everything she has done has been phenomenal, I’d probably leave the rest of that for her to talk about.
Do you have a release date or any more information you can share on the campaign?
No [See related story].
Is Commerce working with the legislative tourism study commission set up in 2015? The panel’s chairwoman has expressed frustration that the agency has not provided regular updates on spending.
A large part of the next 30 to 60 days is diving deep into all of these issues. … After that, we’ll have clear strategies, clear approaches. I’d like to hold off on comment before doing that.
Other than the challenges created by New England winters, what barriers are there to extending the tourism season year-round? What can Commerce do to encourage more tourism-related businesses, especially those located in traditionally summer hotspots, to stay open year-round?
Access to capital is important for businesses like that. … [And] we have capital programs, from microloans … to moderately sized small-business [loans].
Continuing to grow the state’s economy … bringing in more people … that are younger [who] tend to be year-round folks … all of those things help.
Generally, helping those businesses be more prosperous during their heady times also helps get them through their lean times. That’s always going to be the case in a weather environment. The better that they can do during their strong seasons and more capital they can keep in their own pockets, the better they will do over the course of the year.
Putting away revenue for winter, then ramping up during the summer?
Having an economy that supports them robustly during the summertime and then, as the state’s economy grows, and we age down a little bit, you have more folks that will be here year-round to support businesses across the state.
In September, Commerce completed its latest trade mission, this time to Ireland. How effective are these trips in linking Rhode Island businesses to international firms, and what’s upcoming for 2018?
Rhode Island is a small state; we don’t necessarily have great mind share outside of the U.S., but we have tremendous assets for doing international, global business – deep-water ports, airports, we’ve got all that stuff.
Rhode Island shows very well, people come away very impressed and when we get them here they come away even more impressed.
Does Commerce keep track of long-term results from these missions? If so, how?
[Editor’s note: This question was answered by Commerce RI spokesman Matt Sheaff: “The Chafee Center for International Business, who we partner with on the trade missions, monitors the companies that are involved in STEP (State Trade Expansion Program) for things [such as] projected export sales, and actual export sales. … Additionally, our director of international trade programs works in consultation with Bryant University to remain in touch with the businesses that attended the meetings and attendees are asked to fill out an evaluation survey post-trade mission.”]
How will the growing number of international flights into and out of T.F. Green Airport strengthen trade-mission business ties?
It’s a reality that to support large, global businesses you need to be able to get folks around. To the extent that we have the most convenient airport in the entire country, going to places that people want to fly – that really helps the business-traction efforts.
It helps local businesses as they look to expand outside [Rhode Island] with their own product, their own sales, their own market.
As of fall 2017, Commerce has awarded 43 innovation vouchers. This funding is designed to grow Rhode Island research-based businesses and for small businesses to gain financial stability. What’s the future of this program?
We love the results. … We have seen interaction between our world-class institutions and our business community at unprecedented levels as a result of this program.
It makes a real difference when we see projects where intellectual property is [brought] closer to commercialization – that’s the whole point at the end of the day, to make companies grow.
Will the award ever be increased above $50,000 and will recipients be able to apply for a second-tier innovation voucher?
Previous participants can [reapply. According to Commerce data, Full Measure Industries LLC, CBC LLC, Vitae Industries Inc. and Epivax Inc. have each received more than one innovation voucher.]
I don’t know if there are immediate plans to increase the amount available. It feels like a good size, you can get good projects done [with $50,000].
What was the total amount of incentives approved for companies contemplating relocation to or expansion in Rhode Island in 2016 and 2017? How many companies does that represent and have any incentives been earned yet?
[Editor’s note: This question was answered by Commerce RI spokesman Matt Sheaff: $75.9 million was funded through 13 incentive programs in 2016, followed by $99.3 million in 2017. The totals include the small-business program incentive, which runs on the fiscal year. The latter saw $725,120 in funding in fiscal 2016 and $686,375 in fiscal 2017.]
Does Commerce have a method for determining the relative value of these incentives, which are based on future economic success and job creation, to ensure the state will come out ahead – or is it educated guessing, in terms of potential payback?
Anytime you see [incentive] numbers in a press release, they’re estimates.
Our qualified-jobs incentive, [for example] … is determined on personal income tax withholdings of the jobs created. You can use a tax model to estimate what’s likely but if they get paid more, the withholdings will be more and they may be eligible for more incentive.
So, quite an educated guess?
On our part, it’s an estimate based on tax models we’ve developed. They’re pretty good estimates but they depend on the specific salary levels and the specific withholdings and all of the things you deal with when you do your taxes every year.
Has Commerce found the “comfort zone” between serving existing small businesses and going after out-of-state firms?
You always want both. Over the last couple of years, we’ve done quite a bit with local businesses, but it’s the very large attraction deals that get headlines. Infosys comes with 500 jobs, everybody reads about that, but [not so] with the 30-plus micro- and small-business loans, the 43 innovation vouchers, roughly 30 Main Street streetscape improvement [grants], that’s at its heart small business. … In 2018, you will see even more emphasis on both doing it and letting more people know we’re doing it.
[Also], a meaningful percentage of all qualified-jobs deals are in-state expansions.
How much of a focus will there be for Commerce in 2018 in getting young people to open businesses?
That’s always a focus. [However], part of what makes [small firms] work, frankly, is having more big companies … having a place to learn the basics for a handful of years, then start your own thing. This is what you see in the really vibrant economies, where there’s thriving startups there’s also big companies. A mix of large and small companies is what makes an economy whole.
There’s a lot we’re doing to spur that innovation, startup economy. But startup economies don’t exist in a vacuum – you need a mix of both.
House Speaker Nicholas A. Mattiello reportedly said he would like to see incentives for businesses scaled back. Is that something you support?
Incentives have been incredibly important getting us to where we are now, driving down our unemployment rate from the highest in the nation. … They’re also incredibly important, frankly, for us to compete … with our neighbors in Massachusetts. If you look at economies [that are] considered statewide thriving economies – North Carolina, Texas – they all have powerful incentive programs.
We want Rhode Island to be the place where people want to do business.
If incentives were to be rolled back, what other resources would take their place in encouraging people to do exactly that?
We never lead with incentives … they are things that you close with. What attracts companies to Rhode Island, the first bits of the conversation, [are] a deep, deep talent pool that we can draw from … our world-class universities … and our quality of life.
You talked about competing with Massachusetts and getting on par with North Carolina’s and Texas’ economies …
I’m just saying that when you look at the economies that people often hold up as good economies, they use incentives, they use them liberally.
How does our use of incentives compare?
We have among the most powerful incentives in the country. That’s important, that helps us compete.
How are they powerful?
For example, the qualified-jobs incentive is capped at $7,500 per job. … That’s powerful, that’s among the top.
They can be powerful because they truly are pay-for-performance. You don’t get a dime if you don’t do what you’ve committed [to do].
Commerce worked with Pawtucket Red Sox owners on the proposal for a new stadium. Would losing the PawSox have any impact or ripple effect on the business climate in Pawtucket and the rest of the state?
It’s pretty well-documented how important the PawSox are to Pawtucket and to their plan going forward. … To lose that asset, the state would lose revenue and it would harm Pawtucket for sure.
In April 2017, Early told PBN: “From any perspective, the state is now competitive. … Rhode Island is now on the map, so to speak. It is in the conversation.” How was that achieved and what is the next step?
Beyond being in the conversation, we’re actually winning.
We’re winning the deals where companies are looking for world-class workforce, world-class institutions, world-class quality of life and then we make it financially competitive with other places that can boast strong marks in all those areas as well.
But, how are we in the conversation? It’s all of the things I mentioned: leveraging assets we already have which were [previously] underleveraged, our institutions, our quality of life and our workforce. We haven’t gone out and sold those things on a national scale. It’s also having our incentives, the ability to close deals.
Which industries do you think will lead this year in terms of innovation and job creation?
That’s impossible to ever say, specifically. There was a Brookings [Institution] report that lists a handful of targeted industries – those are the industries that will grow the state next year and beyond. [They include: biomedical innovation; information technology/software and data analytics; defense shipbuilding and maritime; advanced business services; design, food and custom manufacturing; transportation, distribution and logistics; and arts, education, hospitality and tourism.]
We have specific areas of expertise, competitive advantages, things that have to do with our location … [and] it’s driven out of our institutions: technology, design.
Features that can be leveraged across industries are our winning points. We don’t necessarily need to own an industry, we need to own capabilities.